Miami. (Photo: J. Albert Diaz/ALM)

Lawyer billing rates in the South Florida market grew more slowly than in most large markets through 2015, and a larger percentage of the work went to smaller law firms, according to an analysis of legal invoices from nearly 100 companies.

Legal management firm Wolters Kluwer ELM Solutions compiled a report showing that corporations used lawyers from smaller firms in the Miami area more often than they did in other large markets.

The report also showed that larger firms have higher billing rates, while the smaller firms offer more competitive prices.

Wolters Kluwer captured the data from legal invoices of nearly 100 of its corporate clients, which include some of the world’s largest corporate legal departments. About half of the companies had revenues of more than $5 billion. About a third of the 97 companies included in the analysis had legal work in South Florida.

About 50 percent of the total hours billed in the Miami-Fort Lauderdale area in 2015 went to firms of 200 lawyers or fewer, and 32 percent went to firms of 50 lawyers or fewer. Only 24 percent of the work in Miami went to law firms with 500 or more lawyers.

This stands in contrast to other regions of the country. In the largest markets, the firms with 500 or more lawyers generally billed more than 50 percent of the hours. In New York for instance, 67 percent of the hours billed went to law firms of 500 or more attorneys. Similarly, Los Angeles firms of 500 or more handled 62 percent of the work, while in Kansas City, Missouri, larger firms handled 58 percent of the hours billed. Houston and Austin, however, were similar to Miami: Larger percentages of the hours billed went to firms of 200 lawyers or fewer.

The reasons why may be more complicated than corporate legal department price hunting, lawyers said. Global firms’ local outposts in Miami are relatively small in number of lawyers, for example. In addition, the area’s strong international in-house counsel network provides an easy avenue for recommendations of local firms, and some areas may have more lawyers who have struck out on their own with boutique firms offering lower rates.

At the national level, the analysis found hourly rates in many major cities have rebounded from the recession. Big law firms in many major cities have seen the largest rate increases, despite slowing demand for lawyers’ time.

But lawyer billing rates in the Miami-Fort Lauderdale area generally grew more slowly, and 2015 rate increases were near the bottom of the list of 25 U.S. markets with the highest volume of legal work sent to law firms. Only New Orleans showed billing rates that grew more slowly. The exact regional percentage increase based on the number of invoices was not made available, but a rough estimate based on firm size puts the one-year rate of increase for 2015 at 3 percent or less for the Miami-Fort Lauderdale area.

Across two years ending in 2015, the average lawyer billing rates in that region grew a total of between 6 and 7 percent, placing the South Florida market within a cluster of 10 markets identified as closest to both the median billing rate and the median rate change from 2013-2015. Those regions could potentially appeal to corporate legal departments as core secondary markets where rates are more stable, according to the analysis. The Orlando legal market just missed inclusion in that cluster, but with even lower rate increases over the two-year period, it was listed among the three top “possible bargains” nationally for corporations seeking legal counsel.

The biannual report by Wolters Kluwer and CEB relied on data from $19.6 billion in legal fees paid by 97 companies to more than 5,900 law firms between 2010 to 2015. The 97 companies hail from a variety of industries, including financial companies, technology and telecommunications, industrial, healthcare, consumer services and goods, professional services, basic materials and utilities and education.

While the report doesn’t provide a breakdown on the causes of slower rate growth in Florida compared with other parts of the country, a spokesman for Wolters said rates are derived from a composite of factors­—the two biggest being firm size and geographic location.

“The conclusion one can draw is costs for location—cost of living, real estate taxes, real estate costs—were generally slower growing when compared to other quick growing parts of the country, such as California, New York or Houston,” said Christopher Tessier, communications manager for Wolters Kluwer ELM Solutions.

The report also showed that other factors, such as lawyer experience, commercial industry and legal practice area, influenced billing rates.

For instance, hourly rates for litigators in Miami were generally lower than for nonlitigators, with the median rate among partners in litigation being $350 an hour, and the median nonlitigation partner rate being $450. In either case, half of the more than 100 lawyers who charged higher than the median rate in their category charged at least $125 more than the median.

In the Orlando area, the pool of lawyers included in the analysis was about a quarter of the size of the Miami pool, but rate differences were less pronounced among all partners. The median rate among partners in litigation was $320 an hour, whereas nonlitigators had a median rate of $400.

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